Võru is a small town in south part of Estonia. There are several boiler plants in
Võru. In one of them, Võrusoo boiler plant, there were three oilfired DE 25 boilers.
One of them has been converted to wood chip firing.

Type of project:a)

conversion from fossile fuels to biofuels

Location (exact, e.g. city, region,

state):

Võru town

Võru County

Estonia

Activity starting date:

14. January 1994 (Letter of Intent)

Expected activity ending date:

30. September 2004

Stage of activity:b)

completed

Lifetime of activity if different from ending date:c)

Technical data:d)

Conversion of a DE 25-14 boiler to biofuels firing through the installation of a pre-furnace. The
converted boiler has been supplemented with an oilburner for low- and peakload. Automatic fuel
storage, wood chipper and flue gas cleaning equipment are also comprised in the project. The output
power after conversion is 7 MW. The estimated annual heat production amounts to 35 000 MW.

c) Methodological work will be required to define lifetime of activities.

d) Methodological work will be required to determine for each type of activity what the minimum data
requirements are.

4) Cost (to the extent possible):

Item

Year 0

= 1994

Year 1

= 1994

Year 2

= 1995

Year 3

= 1996

Year

2 -9

Year 10

Cost of the project in US$:

759409

AIJ component in US$:

759409

n. a.

6700

6700

US$ per avoided ton of CO2 equivalent:

6,66

n. a.

8,18

8,18

Describe briefly how costs are determined:

The investment proper is calculated to be 666666 USD and technical support 92.743 USD.

The lifetime or the project is foreseen to be minimum 10 years (corresponding to the maturity period of the
loan). The following definitions are used:

Cost for the project in year 0:

Costs for investment (= loan from NUTEK) and technical assistance (= grant from NUTEK) are summarized over
the investment period (up to the time for commissioning) and stated for year 0, being the year of the date
for commissioning.

Cost for the project in consequtive years:

Costs (i e possible costs for investment and costs of AIJ component character) are shown per calender year.
Year 1 represents part of the calender year after the date of commissioning.

AIJ component in year 0:

The costs for technical assistance up to commissioning have a clear character of AIJ component. The costs
for the investment can also be maintained to have the an AIJ character, as the loan is a cost for the host
country, and as the loan represents a business risk for the financier, NUTEK.

AIJ component in consequtive years:

Consist a o of the following parts:

1. Costs for follow-up after the date of commissioning (information exchange to secure a high utilisation
of the investment + costs for measuring and reporting to FCCC). The cost for follow-up for the years up to
and including 1996 is calculated by dividing NUTEKs total costs for follow-up by the total years of
operation of all NUTEK-financed projects.

2. Difference between a market interest rate and the favourable interest rate (STIBOR) which NUTEK applies.
This can be settled between the co-reporting parties annually.

3. Business risk.

US $ per avoided ton of CO2 equivalent equals:

- at year 0 the cost of the project/AIJ component cost divided by the projected decrease in CO2
emission over the 10 year lifetime of the project

- for consequtive years the cost of the project/AIJ component divided by actual figure for decrease of
CO2 emission for each of the years 1 - 10.

Note: Possible costs for organisations in the host country may be suggested by the co-reporter in the host
country.

5) Mutually agreed assessment procedures:

Describe the procedures, including name of organizations involveda):

It is intended that upon agreement with a central Estonian authority on reporting of JI-projects,
this authority will assign a local organisation, which will be involved in the evaluation of the
climate effects of this project. After an initial work in cooperation with NUTEKís assigned
consultant, this local organisation will take the main responsibility the continued measuring for
JI-reporting.

a) Please ensure that detailed contact information for all organizations mentioned is reported under

section A.2 above.

B. Governmental acceptance, approval or endorsement

Bearing in mind that all activities implemented jointly under this pilot phase require prior acceptance,
approval or endorsement by the Governments of the Parties participating in these activities, which shall be
shown as follows:

(a) In the case of joint reporting, the report is submitted by the designated national authority of one
participating Party with the concurrence of all other participating Parties as evidenced by attached
letters issued by the relevant national authorities;

(b) In the case of separate reporting, the reports are submitted separately by the designated national
authority of each and every participating Party. Information will only be compiled once reports have been
received from all participating Parties.

1) For the activity:

* First report and joint reporting: Agreement with designated national authority is planned to be
signed summer or autumn 1997.

* Subsequent reports:

Activity was: suspended

terminated earlier

Describe:

2) This report is a joint report:

Yes, Agreement with designated national authority is planned to be signed summer or autumn 1997.

No

3) General short comment by the government(s) if applicable:

Comment by the Swedish government

The Swedish Parliament decided already in 1993 to establish a program for what was later to be known as AIJ
projects.

The decision stemmed from the perception that Swedish mitigation costs were relativeliy high when compared
to most countries especially some of our neighbouring countries Acccordingly, Swedish policy against
climate change should include promotion of activities in these countries.

The relatively high mitigation costs in Sweden are caused by a high share of non-fossil energy in the
energy balance, efficient use of energy due to high carbon dioxide taxes and programmes for the
introduction of renewables as well as for increased energy efficiency. (The background is more fully
described in the Swedish national report to the FCCC)

In the bill leading to the establishment of the programme now reported the minister of energy in 1993
declared that Sweden immediatelly should take action to assist the Baltic countries to make their energy
system more efficient. Such actions were seen to be in accordance with the notion of JI as conveyed in the
FCCC. They should also contribute to the cost-effectiveness of Swedish measures against climate change .
The minister also underlined in his message to the Parliament that Sweden should have a pragmatic approach
in her climate change policy

That the criteria for JI were not yet determined when the programme was launched was not to be considered
as any obstacle for the promotion and introduction of Swedish climate change policy initiatives in the
Baltic countries, Poland and other East European countries. Such measures should be seen as an initial step
towards an efficient, sustainable and equitable international climate strategy.

In the Swedish energy agreement of 1997 it was concluded that "Sweden shall, as a member of the
European Union, work towards a common climate policy and should actively promote international cooperation
in the climatic field. In particular, Sweden shall engage in the development of efficient policy means
within the framework of the climate policy of EU and the Framework Convention on Climatic Change. Sweden
should also cooperate with other countries in the way envisaged by the Climate Comvention, through so
called joint implementation."

C. Compatibility with and supportiveness of national economic development and socio economic and
environment priorities and strategies

Describe (to the extent possible) how the activity is compatible with and supportive of national
economic development and socio economic and environment priorities and strategies

The project meets the following objectives in the Estonian Energy Law:

Whenever possible, quantitative information should be provided. Failing that, a qualitative description
should be given. If quantitative information becomes available, it could be submitted using the update(s).
(If the amount of quantative information is too large, the source could be indicated.)

Item

Please fill in

Describe environmental benefits in detail:

Annual emissions reduction

8830 ton CO2

77.4 ton SO2

6.0 ton NOx

Improved silviculture

Do quantitative data exist for evaluation of environmental benefits?

Yes. Some measurements have been has been carried out at 1994.

Describe social/cultural benefits in detail:

More stable energy supply

Improved working conditions, increased motivation

More employment (fuel companies)

Improved trade balance

Do quantitative data exist for evaluation of social benefits?

Yes . Several reports have been produced

Describe economic benefits in detail:

Decreased fuel costs per MWh.

Good results from first project have initiated a district heating project

Do quantitative data exist for evaluation of economic benefits?

Yes. Several reports have been produced.

E. Calculation of the contribution of activities implemented jointly projects that bring about real,
measurable and long-term environmental benefits related to the mitigation of climate change that would not
have occurred in the absence of such activities

1) Estimated emissions without the activity (project baseline):

Description of the baseline or reference scenario, including methodologies applied:

The reference scenario represents at status quo situation. The decrease in energy consumption that followed
after 1990 is assumed to have reached full impact, meaning a stable heat consumption over the life-time of
the project. Loan from NUTEK is so far one of the very few sources to finance this type of investments for
municipalities in Estonia. As this would imply that an alternative investment would not have taken place,
neither the consequence of another investment, nor the consequence of an alternative technical solutions
are considered.

2) Estimated emissions with the activity:

Description of the scenario, including methodologies applied:

Cf. E.1. above.

Fill in the following tables as applicable:

Summary table: Projected emission reduction s:

GHG

Year 1

Year 2

...

Year 10

A) Project baseline scenario

CO2

11400

11400

11400

CH4

-

N2O

-

other

-

B) Project activity scenarioa)

CO2

0

0

0

CH4

-

N2O

-

other

-

C) Effect ( B-A )

CO2

-11400

-11400

-11400

CH4

-

N2O

-

Other

-

D) Cumulative effect

CO2

-11400

-22800

-114000

CH4

-

N2O

-

Other

-

a) Includes indirect GHG leakages.

Summary table: Actual emission reductions :

GHG

Year 1

=1994

Year 2

= 1995

Year 3

= 1996

...

Year X

A) Project baseline scenario

CO2

n. a.

10100

10100

CH4

-

-

N2O

-

-

other

-

-

B) Project activity scenarioa)

CO2

0

0

CH4

-

-

N2O

-

-

other

-

-

C) Effect ( B-A )

CO2

n. a.

-10100

-10100

CH4

-

-

N2O

-

-

Other

-

-

D) Cumulative effect

CO2

n. a.

-10100

-10100

CH4

-

-

N2O

-

-

Other

-

-

a) Includes indirect GHG leakages.

F. Additionality to financial obligations of Parties included in Annex II to the Convention within the
framework of the financial mechanism as well as to current official development assistance flows

Please indicate all sources of project funding.

Category of funding

(For each source one line)

Amount

(US dollars)

Loan from NUTEK

666666 USD

Grant from NUTEK for technical assistans

92743 USD

1 USD = 7.00 SEK

G. Contribution to capacity building, transfer of environmentally sound technologies and know-how to
other Parties, particularly developing country Parties, to enable them to implement the provisions of the
Convention. In this process, the developed country Parties shall support the development and enhancement of
endogenous capacities and technologies of developing country Parties

Transfer of environmentally sound technologies and know-how

Describe briefly

Schematically, the transfer of knowledge involves the following activities over time:

i) Technology transfer through NUTEKs technical specialist during the implementation of the
project.

ii) Technology transfer through cooperation between foreign supplier and local partner

iii) Conferences, seminars, documentation and training.

iv) Stimulate înet-workingî for the exchange of experience between plant owners with
similar problems, e g îbio-clubsî

technology transfer has taken place through

i) NUTEKs technical specialist support to the local project leader and municipality.

iii) personal from boilerplant has been invited to different seminars and work-shops, documentation
for training has been handed ower

iv) boilerplant has been visited by specialist of other boilerplants, the staff has an excashnge of
experience with other boiler plants and is active in îbio-clubî .